STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

EVANGELICAL DEVELOPMENT MINISTRY, ) INC., )

)

Petitioner, )

)

vs. ) Case No. 97-3385

)

DEPARTMENT OF REVENUE, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal administrative hearing was held in this case on November 20, 1997, in Largo, Florida, before Carolyn S. Holifield, Administrative Law Judge, Division of Administrative Hearings.

APPEARANCES

For Petitioner: H. Andrew Read

5232 Forest Lane

Number 106

Dallas, Texas 75244

For Respondent: Rex D. Ware

Assistant General Counsel Florida Department of Revenue Post Office Box 6668 Tallahassee, Florida 32314-6668

STATEMENT OF THE ISSUE

Whether Petitioner’s application for a consumer certificate of exemption as a religious institution should be approved.

PRELIMINARY STATEMENT

On August 26, 1996, Petitioner, Evangelical Development

Ministry, Inc. (Petitioner or EDM), filed an application with Respondent, Department of Revenue (Department), for a consumer certificate of exemption as a religious organization. After reviewing Petitioner’s application and supplemental information, the Department issued a notice on June 25, 1997, whereby it proposed to deny the application. The Department granted Petitioner an extension of time in which to request a formal hearing. Pursuant to the extension, Petitioner requested a formal hearing to contest the Department’s decision. The matter was referred to the Division of Administrative Hearings to conduct a formal hearing.

At the hearing, Petitioner presented the testimony of six witnesses: John Fryman; Lloyd Groves; Harrison Read; Tom Bates; Benjamin Campbell; and Pamela Groves. Petitioner offered and had sixteen exhibits admitted into evidence. The Department called one witness, W. David Young, and its Exhibits 1 and 2 were received into evidence. The record was left open until

December 11, 1997, to allow parties to late-file exhibits. Respondent filed its Exhibit 2 on December 10, 1997. No late- filed Exhibits were submitted by Petitioner or on its behalf.

The transcript of the hearing was filed on December 11, 1997. At the request of the parties, the time set for filing proposed recommended orders was set for more than ten days after the transcript was filed, thereby waiving the time requirements of Rule 60Q-2.031, Florida Administrative Code. Prior to the

time set for filing the proposed recommended orders, the parties requested and were granted an additional extension. Both parties timely filed proposed recommended orders under the extended time frame.

FINDINGS OF FACT

1. Petitioner is a not-for-profit corporation organized under the laws of the State of Texas and qualifies as a tax- exempt organization pursuant to Section 501(c)(3) of the United States Internal Revenue Code. Petitioner maintains an office in Dunedin, Florida.

2. The articles of incorporation and by-laws adopted by Petitioner do not specify the purpose of EDM, nor do they indicate that EDM is formally related to any other organization(s). However, in separately published documents, Petitioner has stated that its purpose is to promote the Gospel message of Jesus Christ through evangelistic and missionary activities.

3. EDM accomplishes its objective or purpose by conducting discussion groups, forums, panels, lectures, or other educational programs in the area of resource management and development. The seminars and educational programs sponsored and provided by Petitioner are offered in cities across the United States and serve evangelical groups and individuals. Evangelical groups participating in EDM seminars include various mission organizations, Christian colleges, and Christian schools.

   Participation and attendance at EDM sponsored programs are contingent on payment of the required fee to Petitioner.

4. Although EDM provides services to a large number of organizations and individuals, Petitioner is not related to any of those organizations or individuals through a formal affiliation or as a larger hierarchy.

5. The primary focus of EDM seminars is to assist evangelical organizations by providing such groups and individuals with training in financial and fundraising strategies. EDM believes that by effectively developing and implementing such strategies, individuals and organizations can better support and fund the work of the church.

6. In addition to offering seminars and training institutions, EDM also develops and disseminates religious materials and training materials.

7. Examples of topics addressed in EDM one-day seminars include: (1) “Redefining Planned Giving”; (2) “Improving Your Development Department”; “Successful Foundation Grants and Proposal Writing”; “Developing Major Donors for Major Support”; “Writing Effective Newsletters”; and “Strategic Planning for Success.”

8. Petitioner presented testimony that it is related to an organization in California known as Little Church International, Inc. (Little Church). When EDM was first organized, Little Church made a loan to Petitioner; also, Little Church sometimes

   offers counsel to EDM. Beyond that, it is unclear what, if any, relationship exists between Petitioner and Little Church; what the function or purpose of Little Church is; and who the members or member organizations of Little Church are. Finally, EDM presented no competent and substantial evidence regarding the administrative functions performed by Little Church for or on behalf of Petitioner or any other organizations.

   
   

9. Petitioner is in no way obligated to submit to the dictates of Little Church. Moreover, Little Church, is under no legal or other obligation to comply with any requirements of EDM. Although Petitioner claims that it is a member organization of Little Church, and pays a membership fee, Petitioner is unsure of the amount of that membership fee. Moreover, Petitioner established that Little Church: (1) does not direct the day-to- day activities of Petitioner and (2) has no control over Petitioner’s board of directors, officers, or budget.

10. Petitioner acts as a fundraising conduit for an organization known as Living Ministries of South Africa (Living Ministries). There is no formal affiliation between Living Ministries and EDM. However, because Living Ministries consists only of an independent missionary and his wife, Petitioner has agreed to serve as its fiscal agent. In this capacity, EDM processes materials sent to and contributions made to Living Ministries. Petitioner charges Living Ministries a fee for

    providing these services.

    
    

11. There is no formal affiliation between Petitioner and Living Ministries within a larger religious hierarchy. Petitioner has no regulatory authority over Living Ministries; does not control any of the day-to-day activities of Living Ministries; has no control over where the Living Ministries missionaries are placed; or of the contents of the services that Living Ministries provides.

12. EDM does not regularly conduct and carry on religious services and activities. Petitioner holds religious services a few times a year. These services are conducted in conjunction with EDM sponsored seminars and training sessions and are for the exclusive benefit of individuals attending the seminars. Petitioner does not have any ownership or lease interest in any physical facility where weekly services are held for members of any faith or the general public. Rather, Petitioner’s services are held in various hotels or other facilities around the country in which its training programs and seminars are conducted.

13. Several years ago, Petitioner set up a sub-organization called the Association of Christian Development Professionals (ACDP). Petitioner, through ACDP, currently accredits individuals who desire to have a certification from Petitioner. Individuals qualifying for such accreditation or certification are those who have completed certain courses provided by Petitioner. ACDP is not a qualified religious institution and is

    not within a hierarchy of institutions connected with Petitioner. Moreover, EDM does not control or otherwise participate in the day-to-day activities of the members of ACDP.

14. Petitioner previously held a consumer certificate of exemption which expired as of October 18, 1996. In the process of reviewing the application for renewal, the Department determined that it had previously misapplied the law and that EDM did not qualify as a “religious institution” as defined in Section 212.08(7)(o)2.a., Florida Statutes. The Department determined that Petitioner: (1) was not a state, district, or other administrative office and (2) did not assist, regulate or control other organizations which were formally related to EDM within a specific larger hierarchy. The Department also determined that Petitioner does not qualify under any other category for a consumer certificate of exemption.

15. To qualify as a religious institution, an entity must be: (a) a church, synagogue, or established physical place for worship at which nonprofit religious services and activities are regularly conducted and carried on; (b) a nonprofit corporation the sole purpose of which is to provide free transportation services to church members and attendees; (c) a state, district or other governing or administrative office whose function is to assist or regulate the customary activities of religious organizations or members within the state or district organization; or (d) a corporation qualified as nonprofit under

    Section 501(c)(3) of the Internal Revenue Code, that owns or operates a Florida television station.

16. In the instant case, Petitioner has no established physical place for worship; its sole purpose is not to provide free transportation services to church members and attendees, and it does not operate a television station. Thus, it cannot qualify under the first, second and fourth parts of the definition. Notwithstanding the Department’s determination to the contrary, Petitioner contends that it qualifies as a religious institution because it is a state, district, or other governing or administrative office whose function is to assist or regulate the customary activities of religious organizations or members within a state or district office.

    
    

17. Under the Department’s policy, in order to qualify as a state, district or administrative office, EDM must be a part of a larger organization and, within the hierarchy of that larger organization, assist or regulate the activities of those beneath it in the organizational hierarchy. This interpretation is consistent with prior agency orders and is reasonable.

18. Petitioner is not a part of a larger organization within a hierarchy. Even assuming that Petitioner is part of a hierarchy, there are no identifiable members or organizations beneath Petitioner in the hierarchy which it assists or regulates.

19. While EDM is engaged in laudable and worthwhile activities, it does not qualify as a religious institution for tax purposes and, therefore, is not entitled a consumer certificate of exemption.

    CONCLUSIONS OF LAW

    
    

20. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties to this proceeding. Section 120.57, Florida Statutes.

21. Petitioner is seeking approval of an application for a consumer’s certificate of exemption as a religious institution pursuant to Section 212.08(7)(o)2.a., Florida Statutes. As the applicant, Petitioner bears the burden of proving its entitlement to a certificate of exemption by a preponderance of the evidence.

22. Pertinent to this case, Section 212.08(7)(o)2., Florida Statutes, provides:

    
    

    1. The provision of this section authorizing exemptions from tax shall be strictly defined, limited, and applied in each category as follows:

       
       

       1. “Religious institutions” means churches, synagogues, and established physical places for worship at which nonprofit religious services and activities are regularly conducted and carried on. The term “religious institutions” includes nonprofit corporations the sole purpose of which is to provide free transportation services to church members, their families, and other church attendees. The term “religious institutions” also includes state, district, or other governing or administrative offices the function of which is to assist or

          regulate the customary activities of religious organizations or members. The term “religious institutions” also includes any nonprofit corporation which is qualified as nonprofit pursuant to s. 501(c)(3), Internal Revenue Code of 1986, as amended, which owns and operates a Florida television station. .

          . .

          
          

23. Within the terms Section 212.08(7)(o)2.a., Florida Statutes, Petitioner is clearly not a church, synagogue, or established place for worship at which nonprofit religious services are regularly conducted; its sole purpose is not to provide free transportation services to church members, their families, and other church attendees; and it does not operate a Florida television station.

24. Petitioner contends it qualifies as a “religious institution” in that it is an administrative office, the function of which is to assist or regulate the customary activities of religious organizations or members.

25. It is well established that an exemption clause in a tax statute must be strictly construed against the person claiming the exemption. Asphalt Pavers, Inc. v. Department of Revenue, 584 So. 2d 55, 57 (Fla. 1st DCA 1991). This judicial holding is consistent with the terms of Section 212.08(7)(o)2., Florida Statutes, which provides that “the provisions of this section authorizing exemptions from tax shall be strictly defined, limited, and applied in each category. “

26. In this case, Petitioner has failed to meet its burden. Petitioner has shown that EDM is engaged in worthwhile

    activities, i.e., providing training institutes and seminars, primarily in the area of fundraising. Nonetheless, these activities do not bring EDM within the ambit of the term “religious institution” as defined by statute.

27. Notwithstanding the previous issuance of a certificate of exemption to EDM, Petitioner is not a “religious institution” within the meaning of Section 212.08(1)(o)2.a., Florida Statutes. When strictly defining, limiting, and applying the religious institution exemption, clearly EDM does not qualify as a “religious institution.” Accordingly, Petitioner is ineligible for a consumer certificate of exemption.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is

RECOMMENDED that the Department of Revenue enter a final order denying a consumer certificate of tax exemption to Petitioner, Evangelical Development Ministries, Inc.

DONE AND ENTERED this 4th day of March, 1998, in Tallahassee, Leon County, Florida.

CAROLYN S. HOLIFIED

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUMCOM 278-9675

Fax Filing (850) 921-6847

Filed with the Clerk of the Division of Administrative Hearings this 4th day of March, 1998.

COPIES FURNISHED:

Rex D. Ware, Esquire Department of Revenue Post Office Box 6668

Tallahassee, Florida 32314-6668

H. Andrew Read, President

Evangelical Development Ministry, Inc. 5232 Forest Lane, Number 106

Dallas, Texas 75244

Linda Lettera General Counsel

204 Carlton Building

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within 15 days from the date of this recommended order. Any exceptions to this recommended order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 97-003385

Orders for Case No: 97-003385